AN
ACT to make changes in governance of Local management entities with respect to
the implementation of statewide expansion of the 1915(b)/(c) medicaid waiver.

The General Assembly of North
Carolina enacts:

SECTION 1.
G.S. 122C-115(a) reads as rewritten:

"§
122C-115. Duties of counties; appropriation and allocation of funds by
counties and cities.

(a)
A county shall provide mental health, developmental disabilities, and substance
abuse services in accordance with rules, policies, and guidelines adopted
pursuant to statewide restructuring of the management responsibilities for the
delivery of services for individuals with mental illness, intellectual or other
developmental disabilities, and substance abuse disorders under a 1915(b)/(c)
Medicaid Waiver through an area authority or through a county program
established pursuant to G.S. 122C-115.1. Beginning July 1, 2012, the
catchment area of an area authority or a county program shall contain a minimum
population of at least 300,000. Beginning July 1, 2013, the catchment area of
an area authority or a county program shall contain a minimum population of at
least 500,000. To the extent this section conflicts with G.S. 153A-77(a),
the provisions of G.S. 153A-77(a) control."

(a)
An area authority is a local political subdivision of the State except that
a single county area authority is considered a department of the county in
which it is located for the purposes of Chapter 159 of the General Statutes.State.

(b)
A consolidated human services agency is a department of the county."

SECTION 2.(b)
G.S. 122C-115.1(i) reads as rewritten:

"(i)
Except as otherwise specifically provided, this Chapter applies to counties
that provide mental health, developmental disabilities, and substance abuse
services through a county program. As used in the applicable sections of this
Article, the terms "area authority", "area program", and
"area facility" shall be construed to include "county
program". The following sections of this Article do not apply to county
programs:

(1)G.S. 122C-115.3, 122C-116, 122C-117, and 122C-118.1.

(2)G.S. 122C-119 and G.S. 122C-119.1.

(3)G.S. 122C-120 and G.S. 122C-121.

(4)G.S. 122C-127.

(5)G.S. 122C-147.

(6)G.S. 122C-152 and G.S. 122C-153.

(7)G.S. 122C-156.

(8)G.S. 122C-158."

SECTION 3.(a)
G.S. 122C-118.1 reads as rewritten:

"§
122C-118.1. Structure of area board.

(a)
An area board shall have no fewer than 11 and no more than 25 members.
However, the area board for a multicounty area authority consisting of eight or
more counties may have up to 30 members. In a single-county area authority, the
members shall be appointed by the board of county commissioners. Except as
otherwise provided, in areas consisting of more than one county, each board of
county commissioners within the area shall appoint one commissioner as a member
of the area board. These members shall appoint the other members. The boards of
county commissioners within the multicounty area shall have the option to
appoint the members of the area board in a manner other than as required under
this section by adopting a resolution to that effect. The boards of county
commissioners in a multicounty area authority shall indicate in the business
plan each board's method of appointment of the area board members in accordance
with G.S. 122C-115.2(b). These appointments shall take into account
sufficient citizen participation, representation of the disability groups, and
equitable representation of participating counties. Individuals appointed to
the board shall include two individuals with financial expertise, an individual
with expertise in management or business, and an individual representing the
interests of children. A member of the board may be removed with or without
cause by the initial appointing authority. Vacancies on the board shall be
filled by the initial appointing authority before the end of the term of the
vacated seat or within 90 days of the vacancy, whichever occurs first, and the
appointments shall be for the remainder of the unexpired term. An area
board shall have no fewer than 11 and no more than 21 voting members. The board
of county commissioners, or the boards of county commissioners within the area,
shall appoint members consistent with the requirements provided in subsection
(b) of this section. The process for appointing members shall ensure
participation from each of the constituent counties of a multicounty area
authority. If the board or boards fail to comply with the requirements of
subsection (b) of this section, the Secretary shall appoint the unrepresented
category. The boards of county commissioners within a multicounty area with a
catchment population of at least 1,250,000 shall have the option to appoint
members of the area board in a manner or with a composition other than as
required by this section by each county unanimously adopting a resolution to
that effect and receiving written approval from the Secretary by January 1,
2013. A member of the board may be removed with or without cause by the initial
appointing authority. The area board may declare vacant the office of an
appointed member who does not attend three consecutive scheduled meetings
without justifiable excuse. The chair of the area board shall notify the
appropriate appointing authority of any vacancy. Vacancies on the board shall
be filled by the initial appointing authority before the end of the term of the
vacated seat or within 90 days of the vacancy, whichever occurs first, and the
appointments shall be for the remainder of the unexpired term.

(b)
Except as otherwiseWithin the maximum membership provided in this
subsection,not more than fifty percent (50%) ofsubsection (a) of
this section, the membersmembership of the area board shall
reside within the catchment area and represent the following: be
composed as follows:

(1)
A physician licensed under Chapter 90 of the General Statutes to practice
medicine in North Carolina who, when possible, is certified as having completed
a residency in psychiatry.At least one member who is a current county
commissioner.

(2)
A clinical professional from the fields of mental health, developmental
disabilities, or substance abuse.The chair of the local Consumer and
Family Advisory Committee (CFAC) or the chair's designee.

(3)
At least one family member or individual from a citizens' organization
composed primarily of consumers or their family members,of the local
CFAC, as recommended by the local CFAC, representing the interests of individuals:the
following:

a.
WithIndividuals with mental illness;illness.

b.
InIndividuals in recovery from addiction; oraddiction.

c.
With Individuals with intellectual or other developmental
disabilities.

(4)
At least one openly declared consumer member of the local CFAC, as
recommended by the local CFAC, representing the interests of the following:

a.
WithIndividuals with mental illness;illness.

b.
WithIndividuals with intellectual or other developmental disabilities;
ordisabilities.

c.
In Individuals in recovery from addiction.

(5)An individual with health care expertise and experience in the fields of
mental health, intellectual or other developmental disabilities, or substance
abuse services.

(6)An individual with health care administration expertise consistent with the
scale and nature of the managed care organization.

(7)An individual with financial expertise consistent with the scale and nature
of the managed care organization.

(8)An individual with insurance expertise consistent with the scale and nature
of the managed care organization.

(9)An individual with social services expertise and experience in the fields of
mental health, intellectual or other developmental disabilities, or substance abuse
services.

(10)An attorney with health care expertise.

(11)A member who represents the general public and who is not employed by or
affiliated with the Department of Health and Human Services, as appointed by
the Secretary.

(12)The President of the LME/MCO Provider Council or the President's designee to
serve as a nonvoting member who shall participate only in Board activities that
are open to the public.

(13)An administrator of a hospital providing mental health, developmental
disabilities, and substance abuse emergency services to serve as a nonvoting
member who shall participate only in Board activities that are open to the
public.

AnExcept as provided in
subdivisions (12) and (13) of this subsection, an individual that contracts
with a local management entity (LME) for the delivery of mental health,
developmental disabilities, and substance abuse services may not serve on the
board of the LME for the period during which the contract for services is in
effect. No person registered as a lobbyist under Chapter 120C of the General
Statutes shall be appointed to or serve on an area authority board. Of the
members described in subdivisions (2) through (4) of this subsection, the
boards of county commissioners shall ensure there is at least one member
representing the interest of each of the following: (i) individuals with mental
illness, (ii) individuals with intellectual or other developmental
disabilities, and (iii) individuals in recovery from addiction.

(c)
The board of county commissioners may elect to appoint a member of the area
authority board to fill concurrently no more than two categories of membership
if the member has the qualifications or attributes of the two categories of
membership.

(d)
Any member of an area board who is a county commissioner serves on the board in
an ex officio capacity at the pleasure of the initial appointing authority, for
a term not to exceed the earlier of three years or the member's service
as a county commissioner. Any member of an area board who is a county manager
serves on the board at the pleasure of the initial appointing authority, for a
term not to exceed the earlier of three years or the duration of the
member's employment as a county manager. The terms of the othermembers
on the area board shall be for three years, except that upon the initial
formation of an area board in compliance with subsection (a) of this
section, one-third shall be appointed for one year, one-third for two
years, and all remaining members for three years. Members, other than county
commissioners and county managers, Members shall not be appointed
for more than twothree consecutive terms. Board members
serving as of July 1, 2006, may remain on the board for one additional term.
This subsection applies to all area authority board members regardless of the
procedure used to appoint members under subsection (a) of this section.

(e)
Upon request, the board shall provide information pertaining to the membership
of the board that is a public record under Chapter 132 of the General
Statutes."

SECTION 3.(b) All
area boards shall meet the requirements of G.S. 122C-118.1, as amended by
subsection (a) of this section, no later than October 1, 2013.

SECTION 4.(a)
G.S. 122C-119.1 reads as rewritten:

"§
122C-119.1. Area Authority board members' training.

All members of the governing body
for an area authority shall receive initial orientation on board members'
responsibilities and annual training provided by the Department inwhich
shall include fiscal management, budget development, and fiscal
accountability. A member's refusal to be trained shall be grounds for removal
from the board."

SECTION 4.(b) The
North Carolina Department of Health and Human Services, in cooperation with the
School of Government and the local management entities, shall develop a
standardized core curriculum for the training described in subsection (a) of
this section.

SECTION 5.
G.S. 122C-170(b) reads as rewritten:

"Part 4A. Consumer and Family
Advisory Committees.

"§
122C-170. Local Consumer and Family Advisory Committees.

…

(b)
Each of the disability groups shall be equally represented on the CFAC, and the
CFAC shall reflect as closely as possible the racial and ethnic composition of
the catchment area. The terms of members shall be three years, and no member
may serve more than twothree consecutive terms. The CFAC shall be
composed exclusively of:

(2)
Family members of consumers of mental health, developmental disabilities, and
substance abuse services.

…."

SECTION 6. Area
authorities may add one or more additional counties to their existing catchment
area by agreement of a majority of the existing member counties.

SECTION 7.(a)
Beginning July 1, 2012, and for a period of two years thereafter, the
Department of Health and Human Services shall not approve any county's request
to withdraw from a multicounty area authority operating under the 1915(b)/(c)
Medicaid Waiver. Not later than January 1, 2014, the Secretary shall adopt
rules to establish a process for county disengagement that shall at a minimum
ensure the following:

(1)
Provisions of service are not disrupted by the disengagement.

(2)
The disengaging county is either in compliance or plans to merge with an area
authority that is in compliance with population requirements provided in
G.S. 122C-155(a).

(3)
The timing of the disengagement is accounted for and does not conflict with
setting capitation rates.

(4)
Adequate notice is provided to the affected counties, the Department of Health
and Human Services, and the General Assembly.

(5)
Provisions for distribution of any real property no longer within the catchment
area of the area authority.

SECTION 7.(b)
G.S. 122C-112.1 is amended by adding a new subdivision to read:

"(38)Adopt rules establishing a procedure for single-county disengagement from an
area authority operating under a 1915(b)/(c) Medicaid Waiver."

SECTION 8.
G.S. 122C-147(c) reads as rewritten:

"§ 122C-147. Financing and title
of area authority property.

…

(c)
All real property purchased for use by the area authority shall be provided by
local or federal funds unless otherwise allowed under subsection (b) of this
section or by specific capital funds appropriated by the General Assembly. The
title to this real property and the authority to acquire it is held by the county
where the property is located. The authority to hold title to real property and
the authority to acquire it, including the area authority's authority to
finance its acquisition by an installment contract under G.S. 160A-20, may
be held by the area authority or by the contracting governmental entity with
the approval of the board or boards of commissioners of all the counties that
comprise the area authority. The approval of a board of county commissioners
shall be by resolution of the board and may have any necessary or proper
conditions, including provisions for distribution of the proceeds in the event
of disposition of the property by the area authority. area authority. Real
property may not be acquired by means of an installment contract under
G.S. 160A-20 unless the Local Government Commission has approved the
acquisition. No deficiency judgment may be rendered against any unit of local
government in any action for breach of a contractual obligation authorized by
this subsection, and the taxing power of a unit of local government is not and
may not be pledged directly or indirectly to secure any moneys due under a
contract authorized by this subsection.

…."

SECTION 9.(a)
G.S. 122C-117 reads as rewritten:

"§
122C-117. Powers and duties of the area authority.

(a)
The area authority shall do all of the following:

…

(7)
Appoint an area director in accordance with G.S. 122C-121(d). The
appointment is subject to the approval of the board of county commissioners
except that one or more boards of county commissioners may waive its authority
to approve the appointment. The appointment shall be based on a selection by a
search committee of the area authority board. The search committee shall
include consumer board members, a county manager, and one or more county
commissioners. The Secretary shall have the option to appoint one member to the
search committee.

…

(17)Have the authority to borrow money with the approval of the Local Government
Commission.

…

(c)
Within 30 days of the end of each quarter of the fiscal year, the area director
and finance officer of the area authority shall provide the quarterly report of
the area authority to the county finance officer. The county finance officer
shall provide the quarterly report to the board of county commissioners at the
next regularly scheduled meeting of the board. The clerk of the board of
commissioners shall notify the area director and the county finance officer if
the quarterly report required by this subsection has not been submitted within
the required period of time. This information shall be presented in a format
prescribed by the county. At least twice a year, this information shall be
presented in person and shall be read into the minutes of the meeting at which
it is presented. In addition, the area director or finance officer of the area
authority shall provide to the board of county commissioners ad hoc reports as
requested by the board of county commissioners.delivered to the county
and, at the request of the board of county commissioners, may be presented in
person by the area director or the director's designee.

…."

SECTION 9.(b) G.S. 122C-115.2
is amended by adding a new subsection to read:

"(e)The Secretary may waive any requirements of this section that are
inconsistent with or incompatible with contracts entered into between the
Department and the area authority for the management responsibilities for the
delivery of services for individuals with mental illness, intellectual or other
developmental disabilities, and substance abuse disorders under a 1915(b)/(c)
Medicaid Waiver."

SECTION 10. Part
2 of Article 4 of Chapter 122C of the General Statutes is amended by adding a
new section to read:

(a)For the purposes of this section, competitive health care information means
information relating to competitive health care activities by or on behalf of
the area authority. Competitive health care information shall be confidential
and not a public record under Chapter 132 of the General Statutes; provided
that any contract entered into by or on behalf of an area authority shall be a
public record, unless otherwise exempted by law, or the contract contains
competitive health care information, the determination of which shall be as
provided in subsection (b) of this section.

(b)If an area authority is requested to disclose any contract that the area
authority believes in good faith contains or constitutes competitive health
care information, the area authority may either redact the portions of the
contract believed to constitute competitive health care information prior to
disclosure or, if the entire contract constitutes competitive health care
information, refuse disclosure of the contract. The person requesting
disclosure of the contract may institute an action pursuant to G.S. 132-9
to compel disclosure of the contract or any redacted portion thereof. In any
action brought under this subsection, the issue for decision by the court shall
be whether the contract, or portions of the contract withheld, constitutes competitive
health care information, and in making its determination, the court shall be
guided by the procedures and standards applicable to protective orders
requested under Rule 26(c)(7) of the Rules of Civil Procedure. Before rendering
a decision, the court shall review the contract in camera and hear arguments
from the parties. If the court finds that the contract constitutes or contains
competitive health care information, the court may either deny disclosure or
may make such other appropriate orders as are permitted under Rule 26(c) of the
Rules of Civil Procedure.

(c)Nothing in this section shall be deemed to prevent the Attorney General, the
State Auditor, or an elected public body, in closed session, which has
responsibility for the area authority, from having access to this confidential
information. The disclosure to any public entity does not affect the
confidentiality of the information. Members of the public entity shall have a
duty not to further disclose the confidential information."

SECTION 11.(a)
G.S. 126-5(a) reads as rewritten:

"§
126-5. Employees subject to Chapter; exemptions.

(a)
The provisions of this Chapter shall apply to:

(1)
All State employees not herein exempt, and

(2)
All employees of the following local entities:

a.
Area mental health, developmental disabilities, and substance abuse authorities.authorities,
except as otherwise provided in Chapter 122C of the General Statutes.

An employee of a
consolidated county human services agency created pursuant to G.S. 153A-77(b)
is not considered an employee of an entity listed in this subdivision.

(3)
County employees not included under subdivision (2) of this subsection as the
several boards of county commissioners may from time to time determine."

SECTION 11.(b)
G.S. 122C-154 reads as rewritten:

"§
122C-154. Personnel.

Employees under the direct
supervision of the area director are employees of the area authority. For the
purpose of personnel administration, Chapter 126 of the General Statutes
applies unless otherwise provided in this Article. Employees appointed by the
county program director are employees of the county. In a multicounty program,
employment of county program staff shall be as agreed upon in the interlocal
agreement adopted pursuant to G.S. 122C-115.1. Notwithstanding
G.S. 126-9(b), an employee of an area authority may be paid a salary that
is in excess of the salary ranges established by the State Personnel
Commission. Any salary that is higher than the maximum of the applicable salary
range shall be supported by documentation of comparable salaries in comparable
operations within the region and shall also include the specific amount the
board proposes to pay the employee. The area board shall not authorize any
salary adjustment that is above the normal allowable salary range without
obtaining prior approval from the Director of the Office of State Personnel."

SECTION 11.(c)
G.S. 122C-121(a1) reads as rewritten:

"(a1)
The area board shall establish the area director's salary under Article 3 of
Chapter 126 of the General Statutes. An area board may request an adjustment
to the salary ranges under G.S. 126-9(b). The request shall include
specific information supporting the need for the adjustment, including
comparative salary and patient caseload data for other LMEs, and shall also
include the specific amount the area board proposes to pay the director. The
area board shall not request a salary adjustment that is more than ten percent
(10%) above the normal allowable salary range as determined by the State
Personnel Commission.Notwithstanding G.S. 126-9(b), an area
director may be paid a salary that is in excess of the salary ranges
established by the State Personnel Commission. Any salary that is higher than
the maximum of the applicable salary range shall be supported by documentation
of comparable salaries in comparable operations within the region and shall
also include the specific amount the board proposes to pay the director. The
area board shall not authorize any salary adjustment that is above the normal
allowable salary range without obtaining prior approval from the Director of
the Office of State Personnel."

SECTION 12.(a)
G.S. 122C-122 is repealed.

SECTION 12.(b)
G.S. 35A-1202(4) reads as rewritten:

"§
35A-1202. Definitions.

When used in the Subchapter,
unless a contrary intent is indicated or the context requires otherwise:

…

(4)
"Disinterested public agent" means:means

a.Thethe director or assistant directors of a local human
services agency, orcounty department of social services.

b.An adult officer, agent, or employee of a State human services agency. TheExcept
as provided in G.S. 35A-1213(f), the fact that a disinterested public
agent is employed by a State or local human services agency that provides
financial assistance, services, or treatment to a ward does not disqualify that
person from being appointed as guardian.

.…"

SECTION 12.(c)
G.S. 35A-1213 reads as rewritten:

"§
35A-1213. Qualifications of guardians.

(a)
The clerk may appoint as guardian an adult individual, a corporation, or a
disinterested public agent. The applicant may submit to the clerk the name or
names of potential guardians, and the clerk may consider the recommendations of
the next of kin or other persons.

(b)
A nonresident of the State of North Carolina, to be appointed as general
guardian, guardian of the person, or guardian of the estate of a North Carolina
resident, must indicate in writing his willingness to submit to the
jurisdiction of the North Carolina courts in matters relating to the
guardianship and must appoint a resident agent to accept service of process for
the guardian in all actions or proceedings with respect to the guardianship.
Such appointment must be approved by and filed with the clerk, and any agent so
appointed must notify the clerk of any change in the agent's address or legal
residence. The clerk shall require a nonresident guardian of the estate or a
nonresident general guardian to post a bond or other security for the faithful
performance of the guardian's duties. The clerk may require a nonresident
guardian of the person to post a bond or other security for the faithful
performance of the guardian's duties.

(c)
A corporation may be appointed as guardian only if it is authorized by its
charter to serve as a guardian or in similar fiduciary capacities. A
corporation shall meet the requirements outlined in Chapters 55 and 55D of the
General Statutes. A corporation will provide a written copy of its charter to the
clerk of superior court. A corporation contracting with a public agency to
serve as guardian is required to attend guardianship training and provide
verification of attendance to the contracting agency.

(d)
A disinterested public agent who is appointed by the clerk to serve as guardian
is authorized and required to do so; provided, if at the time of the
appointment or any time subsequent thereto the disinterested public agent
believes that his role or the role of his agency in relation to the ward is
such that his service as guardian would constitute a conflict of interest, or
if he knows of any other reason that his service as guardian may not be in the
ward's best interest, he shall bring such matter to the attention of the clerk
and seek the appointment of a different guardian. A disinterested public agent
who is appointed as guardian shall serve in that capacity by virtue of his
office or employment, which shall be identified in the clerk's order and in the
letters of appointment. When the disinterested public agent's office or
employment terminates, his successor in office or employment, or his immediate
supervisor if there is no successor, shall succeed him as guardian without
further proceedings unless the clerk orders otherwise.

(e)
Notwithstanding any other provision of this section, an employee of a treatment
facility, as defined in G.S. 35A-1101(16), may not serve as guardian for a
ward who is an inpatient in or resident of the facility in which the employee
works; provided, this subsection shall not apply to or affect the validity of
any appointment of a guardian that occurred before October 1, 1987.

(f)An individual who contracts with or is employed by an entity that contracts
with a local management entity (LME) for the delivery of mental health,
developmental disabilities, and substance abuse services may not serve as a
guardian for a ward for whom the individual or entity is providing these
services, unless the individual is a parent of that ward. The prohibition provided
in this subsection shall not apply to a member of the ward's immediate family
who is under contract with a local management entity (LME) for the delivery of
mental health, developmental disabilities, and substance abuse services and is
serving as a guardian as of January 1, 2013. For the purposes of this
subsection, the term "immediate family" is defined as a spouse,
child, sibling, parent, grandparent, or grandchild. The term also includes
stepparents, stepchildren, stepsiblings, and adoptive relationships."

SECTION 12.(d)
G.S. 35A-1292(a) reads as rewritten:

"§
35A-1292. Resignation.

(a)
Any guardian who wishes to resign may apply in writing to the clerk,shall
file a motion with the clerk setting forth the circumstances of the case.
If a general guardian or guardian of the estate, at the time of making the
application, also exhibits his final account for settlement, and if the clerk
is satisfied that the guardian has fully accounted, the clerk may accept the
resignation of the guardian and discharge him and appoint a successor guardian,
but theguardian. The guardian so discharged and his sureties are
still liable in relation to all matters connected with the guardianship before
the discharge.discharge and shall continue to ensure that the ward's needs
are met until the clerk officially appoints a successor. The guardian shall
attend the hearing to modify the guardianship, if physically able."

SECTION 12.(e) In
order to achieve continuity of care and services, any successor guardian shall
make diligent efforts to continue existing contracts entered into under the
authority of G.S. 122C-122 where consistent with the best interest of the
ward as required by Chapter 35A of the General Statutes.

SECTION 13.(a)
Section 1(a)(3) of S.L. 2011-264 reads as rewritten:

"(3)
Designate a single entityan area authority for mental health,
developmental disabilities, and substance abuse services to assume
responsibility for all aspects of Waiver management. The following operational
models are acceptable options for Local Management Entity (LME) applicants:acceptable:

a.
Merger model: A single larger LME is formed from the merger of two or more
LMEs.

b.
Interlocal agreement among LMEs: A single LME is identified as the leader for
all Waiver operations, financial management, and accountability for performance
measures."

SECTION 13.(b)
Section 1(c) of S.L. 2011-264 reads as rewritten:

"SECTION 1.(c) The
Department shall require LMEs that have not been approved by the Department to
operate a 1915(b)/(c) Medicaid Waiver by January 1, 2013, to merge with or be
aligned through an interlocal agreement with an LME that has been approved by
the Department to operate a 1915(b)/(c) Medicaid Waiver. If any LME fails to
comply with this requirement, or fails to meet performance requirements of
an approved contract with the Department to operate a 1915(b)/(c) Medicaid
Waiver, the Department shall assign responsibility for management of the
1915(b)/(c) Medicaid Waiver on behalf of the noncompliant LME to an LME that is
successfully operating the Waiver and successfully meeting performance
requirements of the contract with the Department. Those LMEs approved to
operate the 1915(b)/(c) Medicaid Waiver under an interlocal agreement must have
a single LME entity designated as responsible for all aspects of Waiver
operations and solely responsible for meeting contract requirements."

SECTION
14. This act is effective when it becomes law.

In the
General Assembly read three times and ratified this the 3rd day of
July, 2012.

s/ Walter H. Dalton

President of the Senate

s/ Thom Tillis

Speaker of the House of Representatives

_____________________________________

Beverly E. Perdue

Governor

Approved
__________.m. this ______________ day of ___________________, 2012